PBoC’s Crypto Ban Takes Effect As Bitcoin Trading In RMB Plunges

Bitcoin’s drastic decline in value from the $20,000 high in $2017 to the $6,300 plunge in 2018 is attributed to a number of reasons.

Crypto analysts credit the volatile price fluctuation over the last 18 months to market manipulation, regulatory crackdowns, crypto exchange hacking and negative remarks from key players in the industry.

The one factor that most crypto analysts do not highlight enough is that China has had a major role to play in the decline of Bitcoin. There was a point of time when bitcoin was flourishing in China and crypto exchanges and Initial Coin Offerings (ICOs) in the country were thriving.

The cryptocurrency industry took a massive blow when the People's Bank of China (PBoC), the central bank in the country announced that it would ban all ICO’s and crypto exchanges in the country from operating and trading. This meant that Chinese investors could no longer trade their bitcoin for the local RMB.

The ban was announced towards the end of 2017 and came into effect from Feb 2018. More than 85 crypto currency exchanges and 80 plus ICO’s were forced to move out of China. Recent reports show that bitcoin trading in RMB has plunged from a high of 90 percent to a low of lesser than 1 percent of the world’s combined total.

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China Sets Example For Other Countries

Soon after China announced its tough stance on the cryptocurrency industry, a number of other countries followed suit. Some of the countries that have a ban on bitcoin include India, Taiwan and Bolivia.

In a statement, Zhang Yifeng, a blockchain analyst at Zhongchao Credit Card Industry Development Company said

The timely moves by regulators effectively fended off the impact of sharp ups and downs in virtual currency prices and led the global regulatory trend.

Bitcoin has taken a beating in 2018 as investors have adopted a cautious approach to investing in bitcoin as the risk is too high. Financial analysts are concerned that the bitcoin bubble has burst and that it will take a long time for bitcoin prices to reach the highs of 2017.

However some crypto analysts believe that if China were to reverse its stance on bitcoin and put in place regulatory measures for the cryptocurrency industry, it will provide a massive boost to bitcoin as well as other cryptocurrencies. As of now that is not going to happen as the PBOC is quite content in the fact that it drove bitcoin out of China.